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8/14/2019 US Supreme Court: 01-518 http://slidepdf.com/reader/full/us-supreme-court-01-518 1/61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IN THE SUPREME COURT OF THE UNITED STATES - - - - - - - - - - - - - - - -X BE&K CONSTRUCTION COMPANY, : Petitioner : v. : No. 01-518 NATIONAL LABOR RELATIONS : BOARD, ET AL. : - - - - - - - - - - - - - - - -X Washington, D.C. Tuesday, April 16, 2002 The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:08 a.m. APPEARANCES: MAURICE BASKIN, ESQ., Washington, D.C.; on behalf of the Petitioner. LAWRENCE G. WALLACE, ESQ., Deputy Solicitor General, Department of Justice, Washington, D.C.; on behalf of the Respondents. 1 Alderson Reporting Company 1111 14th Street, N.W. Suite 400 1-800-FOR-DEPO Washington, DC 20005

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IN THE SUPREME COURT OF THE UNITED STATES- - - - - - - - - - - - - - - -X BE&K CONSTRUCTION COMPANY, :

Petitioner :

v. : No. 01-518

NATIONAL LABOR RELATIONS :

BOARD, ET AL. :

- - - - - - - - - - - - - - - -X Washington, D.C.Tuesday, April 16, 2002

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:08 a.m.APPEARANCES:MAURICE BASKIN, ESQ., Washington, D.C.; on behalf of the

Petitioner.LAWRENCE G. WALLACE, ESQ., Deputy Solicitor General,

Department of Justice, Washington, D.C.; on behalfof the Respondents.

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C O N T E N T SORAL ARGUMENT OF MAURICE BASKIN, ESQ.

On behalf of the Petitioner LAWRENCE G. WALLACE, ESQ.

On behalf of the Respondents REBUTTAL ARGUMENT OFMAURICE BASKIN, ESQ.

On behalf of the Petitioner

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P R O C E D I N G S (11:08 a.m.)

CHIEF JUSTICE REHNQUIST: We'll hear argumentnext in No. 01-518, the BE&K Construction Company v. the National Labor Relations Board.

Mr. Baskin.ORAL ARGUMENT OF MAURICE BASKIN

ON BEHALF OF THE PETITIONERMR. BASKIN: Mr. Chief Justice, and may it

please the Court:This case presents an important question arising

under the Petition Clause of the First Amendment. Petitioner BE&K Construction is asking the Court to hold that the First Amendment protects objectively basedlawsuits from being declared unlawful by the NationalLabor Relations Board.

Now, the Court has already held that the FirstAmendment does protect lawsuits from statutory sanctionunder both the NLRA and the antitrust laws so long as the suits are meritorious, meaning that they are not objectively baseless. In the Bill Johnson's case, theCourt said -- and I quote -- it is not unlawful to pursue

a meritorious lawsuit under the National Labor RelationsAct. In fact, the Court said it twice and specificallycited the Noerr-Pennington doctrine of the antitrust law.

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Then it --QUESTION: How do you describe the test applied

by the board?MR. BASKIN: Well, the test by the board is one

which says that the employer must be -- must prevail, must be 100 percent prevailing in the lawsuit. As a standardthat's impossible for any employer to anticipate inadvance. No -- no employer can ever be 100 percent sureof prevailing.

QUESTION: Should there be any other component? I mean, I think your client lost basically. So --

MR. BASKIN: Well, the question is what was --QUESTION: What else should be part of the test?MR. BASKIN: The test is what is the -- was

there an objective basis for the litigation. It's not awin-or-lose test, as the Court said in Professional Real Estate -- and I'll quote again -- it's got to beobjectively baseless in the sense that no reasonablelitigant could realistically expect success on the merits.

QUESTION: Well, should the test fromProfessional Real Estate automatically be carried over tothe Labor Relations Act?

MR. BASKIN: Well, in this case, Your Honor, an

answer is yes because the Court itself has interacted with the -- both of the acts. They cross reference with each

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other. Bill Johnson's referred directly to the CaliforniaMotor Transport. Professional Real Estate referred toBill Johnson's as if it's one consistent whole. And itis.

QUESTION: Well, but I -- I wonder if -- if theNational Labor Relations Board doesn't have somediscretion to say that the labor situation is somewhat different, as they apparently do, from the antitrustsituation.

MR. BASKIN: Well, but the irony here is thatthe NLRB has not -- has not interpreted its own statute. It's not being deferred to here. The NLRB is interpretingthis Court's decision in Bill Johnson's.

QUESTION: Which happened to say precisely whatthe NLRB said it said.

MR. BASKIN: Well, no, Your Honor. In Bill --QUESTION: If a judgment goes against the

employer in the State court, if it goes against him, then he's had his day in court. And then the board may proceedto adjudicate the unfair practice claim, and then the employer's suit, having been proved unmeritorious, theboard can take that fact into account when it decides the

labor law violation.

MR. BASKIN: Three --QUESTION: And you've been reading three cases

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to us, so that seems to be the language that you have. I-- I read that as saying you lose. Period. End of thematter. That's what the board decides.

Now, I put that so you'll reply to it.MR. BASKIN: Yes. Three things in the phrasing

that you just said. First, the Court said the board mayproceed, did not say it's an automatic result. Said mayadjudicate the unfair labor practice, did not say it's an automatic result.

And then key phrase, having proved to beunmeritorious, what does unmeritorious mean? Well, thisCourt has consistently said what unmeritorious means. Itsaid so before Bill Johnson's in the Christiansburg case.

QUESTION: Mr. Baskin, back up a bit. MR. BASKIN: Yes. QUESTION: The -- the Court in that very

paragraph gave a definition of what it meant. So, Iwouldn't look outside this document for what the Court meant by with merit/without merit when the -- look at the sentence in the middle of that paragraph. It says if thejudgment goes against the employer and the State court.

MR. BASKIN: Yes.

QUESTION: Judgment against you. Or if his suitis withdrawn or is otherwise shown to be without merit. Otherwise shown to be merit. I took that to mean if you

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lose, it's shown to be without merit. There may be othersituations in which it's shown to be without merit. So,it seems to me the best place to find out what the Courtmeant merit/without merit is the very opinion that we're construing.

MR. BASKIN: Yes, and if it were the holding ofthe opinion, it would have greater weight. But this isnot the holding that we're talking -- that we're parsing out here. This is dicta because the essential --

QUESTION: Well, there are two responses to thedicta point it seems to me. The first one is it wasdicta, but it was dicta that preceded a remand in which this issue in fact would be explored. And the secondresponse is the -- as I understand it, the board itself has followed the -- the dicta for -- I forget how manyyears now, but consistently followed it and Congress has done nothing about it. So, A, query whether it's dicta,and B, even if it is, isn't it the kind of dicta that atthis point definitely should be followed?

MR. BASKIN: It is clearly dicta because theCourt stated what was the issue before it, and the sole issue before it in Bill Johnson's is stated at the

beginning of the opinion, whether the NLRB may issue a cease and desist order to halt the prosecution of a State court civil suit brought by an employer to retaliate

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against employees. And the holding of the case, which analyzes the

First Amendment at great length, says that the right of access to the courts is too important to be an unfair labor practice. And it also defines meritorious as beingreasonable basis, language in the Court's opinion.

QUESTION: I think there's another element thatyou're ignoring. I thought the board looked both atwhether it was a meritless lawsuit against the unions and whether it was for a retaliatory purpose.

MR. BASKIN: Yes.QUESTION: Isn't that the other element?MR. BASKIN: Yes. Both elements must be

present.QUESTION: Okay. And how do we define

retaliatory purpose? What -- what constitutes that --MR. BASKIN: Well, it's --QUESTION: -- do you think, in the board's rule?MR. BASKIN: Yes. It's very -- pretty much the

same as the improper motivation purpose test that was in the Professional Real Estate case, which also has the two- part test. You look at the objective basis first, and

then and only then if there's no objective basis, you look at whether there was a retaliatory motive.

And how that's defined, although the Court did 8

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not grant cert on that issue, we contested vigorously the -- the board's finding of retaliatory motivation here -- because in fact the board has made it a rubber stamp. It's become automatic if the case relates in any way to union activity, the board finds that it's retaliatorymotivation.

But the first part of the test is an objectiveone that the Court has spelled out both in Bill Johnson's itself and in Professional Real Estate. And to take any-- to take the board's standard puts employers in an impossible situation. It is unworkable. Going back tothe question of dicta or not, you have ambiguous language at best because we have several different references to meritorious throughout the Bill Johnson's opinion.

QUESTION: May I just ask this, Mr. Baskin? Doyou think there is a distinction between an ongoing case and a completed case?

MR. BASKIN: It's one mostly as to timing andfacts available to the board, and I think that's what the Court was --

QUESTION: But the -- in your view, the standardis the same. It's not that the board tries to enjoin the

proceeding as -- as opposed to later on bringing an unfair labor practice after it's over.

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the same. QUESTION: It should be, but --MR. BASKIN: Should be.QUESTION: -- do you think that Johnson says

it's the same? MR. BASKIN: We're all here today because the

language in the tail end of the Bill Johnson's opinion is ambiguous as to what they intended the standard to be.

QUESTION: And at least it says there's adifferent standard.

MR. BASKIN: As to -- the -- the impact was --QUESTION: And your view is there should be no

different standard. MR. BASKIN: Correct.QUESTION: And that's the whole key to the case.MR. BASKIN: That really is the whole key to the

case.QUESTION: And why not? QUESTION: Mr. Baskin, is your -- is your

argument -- in your opening remarks, you -- you referred only to the First Amendment. Is -- is it -- is it aconstitutional argument you're making? To -- to agree

with you here, do I have to agree that if Congress passed a law adopting the English rule on -- on attorney's fees, that would be unconstitutional?

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MR. BASKIN: No. We are not saying that. Weare not seeking to constitutionally -- we are asking no more than that you apply this standard to the two statutes you've already applied it --

QUESTION: Which says -- so, it's a statutoryargument.

MR. BASKIN: No. It is a constitutional andstatutory argument, which is what the Court itself said in both of these cases because there's a sanction involved.

QUESTION: I don't know what you mean by a -- isit -- does the Constitution prohibit it or not?

MR. BASKIN: It prohibits a statute fromprohibiting it.

QUESTION: The Constitution prohibits. So, youranswer to my question is --

MR. BASKIN: Constitutional and statutory.QUESTION: You -- you cannot -- that Congress

could not adopt the English rule. MR. BASKIN: No. The difference -- here's the

important difference. QUESTION: It would do that by statute.MR. BASKIN: But is there an -- a declaration of

unlawfulness involved? There are many fee-shiftingstatutes. We're not taking issue with mere fee-shifting,but the National Labor Relations Board is saying that BE&K

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broke the law, and that's what also happened under the antitrust laws. They're saying -- they're issuing a ceaseand desist order from filing so-called nonmeritoriouslitigation.

QUESTION: But the fact that it's triple damagesis a little different than fee-shifting. So, one couldeasily say, when you're exposed to treble damages,putative damages, yes, that's a punishment. Here fee-shifting is the rule in most countries in the world.

So, what is the more here? I understand themore in antitrust cases, treble damages. Here you say,well, there's a finding that you have committed an unfair labor practice. What are the consequences in addition tothat you have to pay the other side's legal fees? Whatare the adverse consequences --

MR. BASKIN: First, the most important is thedeclaration that you are a law violator in and of itself. You have to post a notice for your employees not only atthis job site but all across the country. You have your-- your customers become aware of it. The unionscertainly make sure your customers become aware of it. There's the serious danger of debarment either privately

or by governmental action.

QUESTION: Explain that. You did say that inyour brief about debarment, and I didn't -- I can

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understand when you say someone -- someone's reputation isaffected by being labeled a law violator. But you saidsomething about -- about the jeopardy of debarment and I wasn't clear how that would work.

MR. BASKIN: It's not meant in the legal senseand the Government -- we're not -- we're not talking about whether the Government has to debar the company, but both private actors and many Government contracting officerstake the view they don't want to deal with people who have been declared to be law violators. The goodwill andreputation of the company is at stake.

QUESTION: Well, in our lower case, the --Wisconsin set out to do that on a State basis, didn't it? If you violated the Labor Act, the State was not going to deal with you.

MR. BASKIN: Yes, they did. And then theFederal Government just last -- 2 years ago in the previous administration, had come through with a set of rules saying that companies would be debarred if they were found to have violated labor laws.

So, having this -- a declaration of illegality in place is what makes this different, Justice Scalia,

from a random fee-shifting statute, and that's why we are not asking you to do anything other than what you've already done, which is to apply the First Amendment to two

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statutes which you have determined have great commonalityover the years, as each one keeps referring back to the other in this doctrine.

QUESTION: What do you do with the 2 decadesthat have elapsed -- about 2 decades -- since Justice White's opinion which has been interpreted by the board the way the language most naturally reads? The one thingis to say when the case first came out it was ambiguous.But now we have 2 decades of consistent interpretation of that language by the board.

MR. BASKIN: I regret to say it's a tribute tothe speed of the board's processes and the process of getting this case up to this level on this issue because this case alone has taken 7 years to work its way through the board. When the litigation was begun in this case, itwas 1987. The Bill Johnson's case was fresh. There wasconsiderable doubt as exactly -- as to exactly what it meant. I should note that in the district court opinionsthat are part of the appendix, the unions raised Bill Johnson's and said that it -- they were protected under it, citing it interchangeably with Professional RealEstate.

QUESTION: They won over half their cases,

didn't they? MR. BASKIN: Excuse me?

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QUESTION: Didn't they win -- they won some 15out of their 29 cases.

MR. BASKIN: Depending on how you count, theyjust barely got over 50 percent.

QUESTION: Did you ask -- talking about thehistory of the case, could you tell me how did this caseend up in the Sixth Circuit?

MR. BASKIN: Well, in fact, by the time thiscase got to the court of appeals, BE&K was no longer doing business in California. The gravamen of its doingbusiness was in the Sixth Circuit.

QUESTION: I see. MR. BASKIN: And that's why the decision was

made --QUESTION: I'd like you to address, if I can go

back to the -- what I think was the Chief Justice'squestion. Your -- your basic point, I take it, assumingwith you, as I will, for the moment that the language isambiguous in Bill Johnson, is that we should treat or the statute should be interpreted as treating the antitruststatute and the labor statute a case brought by a defendant the same way.

And obvious differences, which I'd like you to

address, are that, one, there is a history in the labor law of employers using cases brought at law either to

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break unions or to win disputes. And that was one of thereasons why the NLRA was passed. That had nothing to dowith the antitrust laws. There is no such history.

Second, the employer -- the -- the matter iscommitted to an expert board in the labor area, which apparently believes that the way to enforce the labor law, unlike the antitrust law, is to say the sham exception exists before the case is decided, but once the case is decided, we're going to keep employers out of the courts by saying if they lose, that's the end of any immunity that they get. And we will now look to what their motivewas in bringing this lawsuit. We have an expert board. We have a different history. We have different statutes.

MR. BASKIN: The --QUESTION: And now, what is your response?MR. BASKIN: The irony is that the Court

considered those purported differences in the BillJohnson's case and rejected them.

QUESTION: All right. Obviously -- look --MR. BASKIN: No, no. I'm talking about the

first part. QUESTION: I -- but I'm trying to stay away from

Bill Johnson because obviously if you're right that the statute holds it, I mean, I -- all right. Go ahead. Sorry. I didn't mean to interrupt.

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MR. BASKIN: Well, to me it's -- the interestingthing about this case is the Court has itself considered these very questions that you're raising and you have answered them, and you do not need to revisit them to --to come out with the conclusion that the NLRB has either misinterpreted the standard or that the standard isunworkable.

QUESTION: Well, but I -- I have -- I have thesame question that I think underlies Justice Breyer'sconcern. You would seem to give zero weight to theboard's interest in stopping a purely retaliatory suit. The board says, now, you have organized this clerical unit and if -- if you persist in your union activity, we're going to sue you for the way you've been keeping ourbooks. We're going to sue you for malpractice, blah,blah, blah, blah. And so long as there's any basis forthe suit, they can do that in your -- or am I misstatingyour view?

MR. BASKIN: Well, only in one respect. It hasto have an objective basis. We are not here defendingsham litigation, baseless litigation.

QUESTION: Well, I suppose there's always abuse

of process if there's -- but if there's some basis, then you can use it specifically to retaliate.

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reasonable basis. And yes, yes. QUESTION: You can specifically use it to

retaliate. MR. BASKIN: The Court -- this Court has said

that if there is an objective basis, that means it's a meritorious lawsuit. Then there may also be a motivationof retaliation. Weighty, countervailing considerations.

QUESTION: But -- but we're talking -- we'retalking in -- in the labor context.

MR. BASKIN: Yes. QUESTION: And you lose the suit. So, there's

-- you do not -- you're not the prevailing party in thesuit. And you -- you lose on the merits. There's nothingthe board can do about it if you've done it specifically to retaliate and for no other purpose.

MR. BASKIN: If it is a reasonable, meritorioussuit, as this Court has defined it, where the right of access to a court is too important to be called an unfair labor practice solely on the ground that what is sought in the court is to enjoin employees from exercising a protected right because of the First Amendment to the Constitution, the right to petition the courts with a

meritorious lawsuit.

QUESTION: But the First Amendment argument goesby the boards once the case is over.

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MR. BASKIN: No, Your Honor, because -- for thesame reasons that the Court held in Professional Real Estate. The employer has the right not to be secondguessed with 20/20 hindsight as long as it had areasonable basis for the suit.

QUESTION: Yes, but that ignores the fact thatwe're not concerned solely with chilling; we're alsoconcerned with retaliation. And if we didn't have theretaliatory character of the lawsuit involved, I wouldthink you would have a much stronger argument as you just made it. But the retaliation is there and I don't see howwe can accept your -- in effect, your chilling argument without ignoring the retaliatory character.

MR. BASKIN: Because the employers are beingchilled and, in effect, the retaliation --

QUESTION: Well, they're being chilled in -- inengaging in retaliation for the exercise of statutoryrights.

MR. BASKIN: But there's actually lessretaliation that's going to take place once the suit is completed. If that were the standard, then the boardshould be instructed to intervene sooner to keep the

employees from having to spend more money to defend themselves.

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seems to me, is set out in the cases. We've got a --we've got a federalism interest in letting the State courts at least adjudicate their cases. So, that's theanswer to that objection.

MR. BASKIN: Well, here there's even a morecompelling interest. You have two statutes, Federalstatutes, that the employer was invited to file lawsuits under.

QUESTION: All right. Let's go back then to the-- to the difference between the two Federal statutes. The premise of Justice Breyer's question a moment ago accepted the ambiguity. If we are not that indulgent andif we read Bill Johnson's the way Justice Ginsburg read it -- and I will be candid to say I read it -- number one,the ambiguity does not leap out at us.

And number two, I'd like to go back to JusticeGinsburg's question. Even if we assume there wasambiguity at the beginning, we have had 20 years of board practice which seems to me to have dissipated any ambiguity. What's your response to that?

MR. BASKIN: Well, the ambiguity was in theopinion that led the board to take an erroneous view --

QUESTION: That's right I believe, and the board

has made it very clear how the board is reading it, andafter 20 years, we've got a pretty clearly settled body of

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law, haven't we? MR. BASKIN: Well, a settled body of erroneous

law. And is that what the Court --QUESTION: And we're interpreting statutes --

the -- the settled body is clear and Congress isapparently quite agreeable to it.

MR. BASKIN: Well, first, the Court has said youdon't defer -- that -- that you can't read anything into congressional inaction, particularly when it has takenthis long before the board ruling really was definitive. And it has taken that long. The issue has been in doubtfor most of that 20-year period.

But the -- going beyond that, the -- theboard --

QUESTION: I don't understand that. Why do yousay it's been in doubt for most of the 20-year period?

MR. BASKIN: Because it's been in doubt. Caseslike this one have been taking a long time to wind theirway through the process. At each step, the board said,well, we think that it -- there -- it was contested, asthe board said --

QUESTION: You mean it has been contested

constantly during that --MR. BASKIN: Yes. QUESTION: -- 20 -- 20-year period?

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MR. BASKIN: Absolutely. QUESTION: Has the board ever taken a different

position in the 20-year period?MR. BASKIN: There have been dissents, but no,

the board has generally taken a consistent view. QUESTION: So, the board's position has been

clear for 20 years.MR. BASKIN: Yes, but the board --QUESTION: The board is slow. It may take the

-- the cases may be in wending their way through. MR. BASKIN: But the board is not entitled to

deference in its interpretation of the U.S. Constitutionor of this Court's decision. And that's all that we'retalking about here is the board's interpretation of the Constitution and this Court's opinion. It's notinterpreting the statute.

QUESTION: I think we're not raising -- I thinkJustice Ginsburg's question and my question is not so much geared to an issue of deference. We're -- we're trying to-- to get at the -- what seems to us the fact that the lawhas become settled. It may require no deference. It mayhave become settled because an administrative agency was

interpreting what you think was an ambiguous opinion of this Court in the first place. But it seems to havebecome settled.

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And there is a good reason, which underlies ultimately our -- our approach to stare decisis in statutory cases, for letting settled statutoryunderstandings stayed settled unless the legislativebranch wants to change them. And that's the argumentwe're getting at, not deference.

MR. BASKIN: Well, it is -- stare decisis is aform of deference, and we're talking about stare decisis would apply to the Court's own opinion. Only this Courtis required to defer to itself about its own opinion. Your -- and so that's why we are talking about deference, I would submit. At least I interpret your question asasking should you stick with what the board has come up with. This Court has not ruled on --

QUESTION: I'm saying that --MR. BASKIN: -- on Bill Johnson's since Bill

Johnson's.QUESTION: I'm saying that in -- as -- as your

own answers indicate, for 20 years there seems to have been a -- a settled practice on the part of the boardwhich at best is not inconsistent with our opinion. Whyshouldn't we let a settled statutory regime stay settled

unless the legislative branch wants to change it?

MR. BASKIN: I contest that it's a settledstatutory regime, that we are dealing with a First

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Amendment right, and that the board's outcome, which it has taken this long to reach back to the court, is wrongunder the First Amendment. It has proved to be unworkableand it subjects employers to the impossible situation in future cases and in cases going on right now that they are expected to have 100 percent certainty of the outcome.

Indeed, the -- the board could, under thisstandard, say that you can win a jury verdict, go -- have it upheld by the district court, only to be reversed by an appeals court, and still be found under this Court's standard to be nonmeritorious and you lose. You have --you have violated the law.

QUESTION: If there's a retaliatory motive. MR. BASKIN: If there's a retaliatory motive.

And that's all it takes. There's a retaliatory motive. You go through all of that based on an attack on yourbusinesses, which is why employers tend to file these lawsuits. They don't like lawyers that much, don't wantto spend the money to do it, but they're under attack. BE&K was under attack in every conceivable forum.

QUESTION: But, I mean, that's a normal problem,isn't it, with the labor statutes and most other statutes.

It forbids retaliatory behavior. Of course, you'll havecases where people make the wrong decision about it, where it's hard to predict, and so forth. But that's the

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general situation. MR. BASKIN: Well --QUESTION: We're trying to carve out a -- an

exception where you're home free from that. MR. BASKIN: Well, no, it's the board that's

carving out an exception from the basic First Amendment protection that this Court has recognized already.

QUESTION: Mr. Baskin, that -- that goes backevery time to how you construe this paragraph, and so if the position that Justice White is making a distinction here between, on the one hand, an ongoing proceeding -- the First Amendment says you can't stop it. Never minddeference to State courts. That's another considerationthat weighs it to the same end, but traditionally under the First Amendment, a prior restraint, stop it, has been what the Court has looked at most cautiously. ThenJustice White tells us, but it's different once the adjudication is over.

The -- the line between prior restraint and subsequent punishment goes all the way through FirstAmendment learning, and you treat this as, well, ambiguous, but if it were clear it's that there's any

difference between stopping an ongoing proceeding andlooking at a situation after it's been adjudicated?

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mainly the difference of having more facts, having an outcome in front of the board at that point. And what theCourt wanted to get across -- the issue in front of theCourt in Bill Johnson's was don't interfere with an ongoing lawsuit. We don't know how it's going to turnout.

All right. Once it turns out, if it's withoutmerit -- meritorious -- I'd just invite the Court to look at each use of the word meritorious in the Bill Johnson's opinion. You will regrettably find some inconsistenciesnot only internally but with other opinions of this Court both before Bill Johnson's and after. You have theopportunity to clarify the law now in a way that is verystraightforward under the Professional Real EstateInvestors test.

If there are no other questions, I'd like toreserve the remainder of my time for rebuttal.

QUESTION: Very well, Mr. Baskin.Mr. Wallace, we'll hear from you.ORAL ARGUMENT OF LAWRENCE G. WALLACE

ON BEHALF OF THE RESPONDENTSMR. WALLACE: Thank you, Mr. Chief Justice, and

may it please the Court:

The board and the courts of appeals have had nodifficulty in reading Bill Johnson's the way I think most

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people would read this Court's opinion as comprehensivelyaddressing what the board was doing with respect to the unfair labor practice under section 8(a)(1) of the filing of --

QUESTION: Mr. Wallace. MR. WALLACE: -- retaliatory lawsuits.QUESTION: Mr. Wallace, when I ask you a

question, please stop.MR. WALLACE: I didn't hear you. I'm sorry.QUESTION: Well, listen a little more closely.Do you disagree with Mr. Baskin's contention

that the word meritorious is used inconsistently in the part of Bill Johnson's that we're talking about?

MR. WALLACE: I do disagree with that, and --and no court of appeals that has reviewed board decisions since Bill Johnson's has read it that way. The Courtquite clearly distinguished between enjoining ongoing lawsuits, which it said could be done only if the lawsuit was baseless. Otherwise, the board has to wait until thelawsuit has been resolved. If the lawsuit turned outfavorably to the employer, then it could not be an unfair labor practice. But if the lawsuit turned out to be

unmeritorious, if the employer lost, then the board could consider whether it was filed for a retaliatory purpose.

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was not the situation before the Court. I mean, it -- itmay be the clearest dictum in the world. It may be thedictum closest to a holding possible, but it is still dictum. The Court did not have before it a case in whichthe employer had already brought the suit and had lost. Now, you know, it said what would happen in thatsituation, and you know, I think that's entitled to some weight. But the issue that your opponent wants to arguehere is whether the Court was wrong to say that.

MR. WALLACE: I beg to differ. The Courtspecifically noted that some of the claims of the employer had already been dismissed in the State courts, and in footnote 15, at the end of the -- its opinion, it said theboard, therefore, can use the criteria we --

QUESTION: But those cases were not before them. It said what the board can do in those cases that are notnow before us. As I say, it may be a dictum that is thevery next thing to a holding, but it is not a holding. Those were not cases that the Court had in front of it.

MR. WALLACE: It -- it was a direction for howfurther proceedings in the case should be handled.

QUESTION: Exactly, as many dicta are. As many

dicta are, and we do not always observe those directions when we -- when we have the opportunity to examine the matter in a -- in a more immediate context.

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MR. WALLACE: In any event, if I may turn now toaddress the question that the Court asked the parties to address in formulating the question presented here. Oursubmission in this case is that this Court's holding in Professional Real Estate Investors interpreting theantitrust laws and the Court's decision in Bill Johnson's,including this -- these dicta to govern further proceedings interpreting the National Labor Relations Act,are entirely compatible with one another in light of the important differences in the purposes, processes,remedies, and practicalities of enforcement that wereimplicated in the two statutory schemes at issue.

QUESTION: Well, I -- I have one particulardifference in mind that I'd like you to comment on. I --I -- it's -- it seems to me that what is sought to be donehere is much worse as far as the independence of thecourts and the guarantee of access to the courts by -- by the citizenry is concerned than what was sought to be done in -- in -- what case -- Professional Real Estate.

And this is the difference. In ProfessionalReal Estate, it would have been the courts that would have decided the facts which would have imposed upon the losing

party attorney's fees. In this situation, it is going tobe the Labor Board that will decide the factual question of whether there was a retaliatory motive, and the courts

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will have to defer to that factual finding if there is abasis in the record, whether the courts agree with it or not.

I find it quite offensive to think that Article III courts are going to be told that certain people who have come to them for relief will pay a penalty for doing so on the basis of a retaliatory motive found not byArticle III courts at all but by the labor court -- but bythe Labor Board. In that respect, this case is much worsethan -- than what was going on in -- in Professional Real Estate.

MR. WALLACE: Well, the board is notcontradicting anything found by the courts. The questionof retaliatory motive was not at issue in the underlying litigation, and the board has to wait under this Court's decision in Bill Johnson's before it addresses thequestion of whether there's been an unfair labor practice --

QUESTION: They will address it in a proceedingbefore the board. They will find an unfair labor practiceon the basis of their finding of a retaliatory motive.

And I -- I note, by the way, as to, you know,

how -- how much we can trust those -- those findings -- Ihad one of my law clerks look up how many -- how manytimes the board has imposed this kind of an unfair labor

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practice penalty for -- for bringing a lawsuit. Since thePower Systems case in '78, which is when they started this process, they have 26 decisions ordering the employer to pay attorney's fees incurred in defending a lawsuit and 3 decisions in which it -- it ordered a union to do so. Now, is -- is there some reason that unions are not using lawyers as much as companies are these days?

MR. WALLACE: Well, the -- the cases againstunions are much less numerous to begin with because unions are less apt to bring lawsuits to interfere with the rights of employees under section 7 for concerted activity. We're talking about a retaliation againstsection 7 rights. Usually that's been the subject ofemployer suits, but the board does apply the same test when --

QUESTION: There were union lawsuits in thispresent case, weren't there? Plenty of them.

MR. WALLACE: But those were against theemployer, and -- and they --

QUESTION: But suits -- suits against theemployer can certainly be brought to impair the -- the rights of the employees not to -- not to unionize.

MR. WALLACE: That would have to be a showing a

violation by the union of 8(b)(4), not -- not that the lawsuit was an 8(a)(1) violation against the concerted

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activities rights of employees. The employer would haveto show that the union lawsuit violated duties that the union owes, and that was resolved against the employer on the merits in this case because the -- the subject of the lawsuits was about working conditions at the site of employment, which was a legitimate union concern.

QUESTION: Never -- never mind the 26 to 3. Just -- just tell me why I -- as -- as an Article IIIjudge, I should not be concerned about leaving it to a Federal agency to make the factual finding that will determine whether somebody will be punished for bringing areasonable lawsuit, although one which ultimately loses inFederal courts. Why shouldn't I be concerned about that?

MR. WALLACE: Well, this isn't punishment. It'smake-whole relief under an administrative scheme which ismeant to protect employees in the exercise of their concerted rights, and it involves no contradiction of any issue that was before the -- the court in the underlying litigation which did not have occasion to address whether the suit was brought for a retaliatory purpose.

QUESTION: Mr. Wallace, Mr. Baskin told us thatthere are punitive aspects to this that could lead to

debarment he said. So, it's not simply to provide forfee-shifting, but that there are heavy consequences.

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Chief Justice referred earlier, Wisconsin Department ofIndustrial Relations against Gould, was one in which this Court held that Wisconsin law was preempted, and Wisconsincould not refuse to make purchases, State purchases, from companies that had been found to have violated the National Labor Relations Act because the whole purpose of the remedy scheme under the National Labor Relations Act is remedial and the remedies are limited, and the idea is to get labor disputes behind us, not to have disruptions of the economy, to keep productivity going, and to keep the people employed.

QUESTION: Well, is -- is the point of thiscolloquy whether or not this act can be called punitive or this NLRB doctrine can be called punitive? I -- I hadthought you said that it is punitive, or am I wrong? Maybe you think nothing -- maybe you think nothing turns on that.

MR. WALLACE: Well, I -- I wouldn't think that-- that anything would turn on it, but it is not punitive. The only remedy that's granted is a make-whole remedy that the costs incurred by the prevailing defendants in a suit brought for an improper motive, namely to coerce those

defendants in the exercise of rights granted them by Federal statute when suit turned out --

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virtue of the finding of the unfair labor practice? MR. WALLACE: Well --QUESTION: I mean, true in terms of money, it's

the fees. Is there any other effect --QUESTION: -- by virtue of their finding? MR. WALLACE: Notice is to be posted. The cease

and desist order issues. Those -- those parts of theremedy were not challenged in this case.

QUESTION: Well, let's just talk about the make-whole remedy. We held in 1982 that in a private suit foran unfair labor practice, which provides for making whole the -- the plaintiff for -- for his damages, there was no authority in the court to award attorney's fees, that making whole there did not include attorney's fees. What-- and -- and, you know, the language was very clear about the American rule and what a -- what a change it would be. Why -- why should it be any different when the unfair labor practice is -- is decreed by the board rather than in a private action?

It doesn't say explicitly that you can getattorney's fees, just as -- just as the other -- the --the private action provision didn't say explicitly. It

just said, you know, whatever damages you have. Anddamages were not intended to include that. Why should wehold any differently in this situation, especially when

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the result is to leave it to the board to decide whether-- whether somebody will be punished for bringing a meritorious but ultimately unsuccessful suit in Federalcourt?

MR. WALLACE: Well, board proceedings are muchless burdensome than -- than court proceedings to those that are issue, and the Court held in Bill Johnson's that the board remedy of recompensing the defendants whoprevailed in this suit for their costs, because the suit was brought to defeat their section 7 rights, was a permissible remedy by the board.

QUESTION: We held it or -- or said it. I mean,that -- that's one of the disputes here, isn't it?

MR. WALLACE: Yes. They held it in the sense of-- of prescribing that rule for the further proceedings to be held in that very case on remand from the Court'sorder.

QUESTION: We're just going around the dictumpoint again. I consider it dictum, and -- and the issueis whether that was a wise thing to say.

MR. WALLACE: Well, when the Court prescribes arule of that nature, the United States considers itself

bound by it in its further handling --

QUESTION: Yes. I'm -- I'm not criticizing youfor arguing the point, certainly not.

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QUESTION: Mr. Wallace, I -- do you agree thatunder the board's rule here that it does allow the board to find the unfair labor practice and impose the sanctions on litigation brought by employers that is not limited to just shams and abuse of process?

MR. WALLACE: That's --QUESTION: It does allow the imposition of these

things for an employer suit that could be considered objectively reasonable at the time it was brought.

MR. WALLACE: Exactly so. That -- I thought theCourt made it quite clear in Bill Johnson's that as long as the suit was an unmeritorious one, in the sense that it did not prevail, the board could afford the limited remedy that's available under the act.

QUESTION: Well, does that have the necessaryeffect of at least chilling some conduct that is protected by the First Amendment? I mean, it seems to me it does. You have to -- you would have to concede that it does.

MR. WALLACE: But it -- it's a far less dauntingsituation than what the Court was faced with under the antitrust laws in the Professional Real Estate Investorscase.

QUESTION: Mr. Wallace, isn't it correct that

the scope of chilling is limited to those with aretaliatory motive?

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MR. WALLACE: Absolutely. QUESTION: I thought it's where the board

finds --QUESTION: -- already chilled those cases. QUESTION: -- to those where the board and not

Federal courts on their own find a retaliatory motive. MR. WALLACE: But, of course, the board's

findings are subject to judicial review. QUESTION: For -- so long as there's substantial

evidence, which means -- you know. MR. WALLACE: Correct.QUESTION: All right. So --QUESTION: In every 8(a)(1) case, the

retaliatory motive is found by the board. That's part ofthe statutory proceeding, isn't it?

MR. WALLACE: That is correct.QUESTION: The other parts of this statutory

proceeding do not exclude the Federal courts from their business, do they, which this does by imposing penalties upon people who come to the Federal courts?

MR. WALLACE: Well, I think this Court's make itquite -- this Court's decisions make it quite clear that

under the National Labor Relations Act, it is board rather than courts that have the responsibility of ruling about unfair labor practices.

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QUESTION: We agree with that and the only issueis whether that statutory provision places within theboard the power to impose this particular sanction for an unfair labor practice, a penalty for bringing a meritorious lawsuit.

MR. WALLACE: Well, make-whole relief --QUESTION: Isn't the make-whole relief simply

that they've said, since ours is a statute which foresees taking labor disputes out of the courts and putting them into the board, since that's why it was passed, we're going to say a -- a loser in a Federal lawsuit thatviolates that basic underlying purpose has to pay attorney's fees to the winner? Now, is there anythinghere other than that?

MR. WALLACE: Not -- not at all. That's -- thatis what is at issue, and the -- the National LaborRelations Act authorizes the board, under this Court'sopinion in Bill Johnson's, to afford that kind of a limited remedy --

QUESTION: Well, isn't what --QUESTION: Is the courts' -- is the board's

definition of a unmeritorious lawsuit simply one which --

in which the plaintiff does not get what the plaintiff wants. It's thrown out of court, so to speak.

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Chief Justice. QUESTION: How -- how would it vary? Why do you

use the term approximately? MR. WALLACE: Well, there can -- there can be

cases in which a voluntary dismissal was taken with prejudice. Sometimes the question of whether it was anunmeritorious suit becomes a debatable question. Butordinarily it's one, as it was in this case, in which the courts have ruled against claims that the employer made.

QUESTION: Is -- is -- I'm sorry. Is there anyauthority? I mean, I thought, as a matter of proposition,maybe there would be some authority like a -- anelectricity generating regulator would have said incertain kinds of lawsuits, you have to have fee-shifting. The SEC might say in certain kinds of lawsuits, certain companies have to pay attorney's fees. The barbers'regulator might say in certain union -- or certain -- certain instances the barbers have to pay the legal fees of somebody else. Is -- is there any comparable authorityany other place that you've found?

It -- it doesn't seem to me an absurdproposition of law or of constitutional law that a

regulator who's in charge of a particular group of individuals or businesses says in particular circumstancesthere will be fee-shifting. But maybe that's total --

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maybe this is the only case that's ever come up. MR. WALLACE: Well, we -- we didn't come up with

analogies in which regulatory agencies do the fee-shifting. There are certainly many statutes that providefor fee-shifting. The Fogerty case discusses a number ofthem.

QUESTION: But they have to be very explicitbecause it's such an extraordinary thing. That's what ourjurisprudence very clearly says. And here with -- with nomore explicitness than there was in the case in Summit Valley, the -- the agency is assuming the power to fee- shift and to make the factual determination upon which the fee-shifting turns. I think that's extraordinary.

MR. WALLACE: Well, there is not a reference tofee-shifting as such in the National Labor Relations Act, but Congress did say in section 8(a)(1) that it shall be an unfair labor practice to an employee to interfere with, restrain, or coerce employees in the exercise of the concerted activity rights for mutual aid and protectionthat are guaranteed in section 7. And this Court in BillJohnson's recognized that there had been a history of the use of the courts for that purpose.

QUESTION: Mr. Wallace --QUESTION: In -- in a case like this, if we have

essentially these facts, if the finding of the board was 40

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is that the purpose of the employer in bringing the suit was because the employer's board of directors met and they say, we are being hurt in the marketplace, public opinion is against us, we must bring these suits to protect our position in the business community, I take it that is a retaliatory motive.

MR. WALLACE: Well, the retaliatory motive wouldbe -- it would have to be shown that the suit was broughtfor the purpose of coercing, discouraging, suppressing,restraining the employees in the exercise of their rights.

QUESTION: Well, but you -- you know what I'mtrying -- trying to get at. The -- the union is doingthese to weaken the employer and the employer meets and says, this is hurting our business, it's hurting us in the marketplace. Is that retaliatory?

MR. WALLACE: Well, the -- the board addressesthat question in light of all the circumstances of the case. To the extent that the suit was not baseless in lawor fact that the employer brought --

QUESTION: Assume -- assume that there -- it'snot baseless.

MR. WALLACE: That weighs in the employer's

favor. There are other factors that weigh against theemployer. In this --

QUESTION: But it can be retaliatory for the41

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employer to protect its business against suits by the union which are brought by the union for the motive of weakening the employer. That's retaliatory.

MR. WALLACE: Well, only if the employer hasbrought suits against the union or the employees. Itcertainly can defend against any suit --

QUESTION: No. It's been bringing suits inorder to stop the other suits.

MR. WALLACE: Well --QUESTION: Let -- let me ask you in a related

vein. Maybe it's an unrelated vein. Can -- couldCongress overrule Noerr-Pennington?

MR. WALLACE: This Court did not indicate in anyway that it could not reexamine, modify the rules of Noerr-Pennington or of Professional Real Estate. TheCourt --

QUESTION: In other words, Noerr-Pennington doesn't have a constitutional underpinning.

MR. WALLACE: It -- it certainly construed theantitrust laws in light of the fact that those laws focus mostly on private conduct in the marketplace, not on petitioning for Government-imposed restraints, and that

there was a need in construing them not to -- to allowimproper chilling of the bringing of lawsuits or other forms of petitioning activity.

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And in -- in Professional Real Estate itself, the procedural posture focused on the need for summary judgment to be available against a counterclaim for trebledamages under the antitrust laws in circumstances in whichthe counterclaimant, after the underlying copyrightinfringement suit was found to be objectively reasonable,was saying, but I still need further discovery in order to ascertain the intent and motives of the original plaintiffin bringing the copyright infringement suit because it'smy view that -- that they didn't really expect to prevail and that they were bringing it for anticompetitivepurposes.

And the danger that the Court was addressing there was that much of the protective quality of the Noerr doctrine itself could be undermined if the originallawsuit that supposedly is protected could be chilled by the prospect of burdensome discovery and treble damages.

QUESTION: My -- my concern -- my concern is --is this, is that the First Amendment has its owncorrective counterspeech, but what the board has done hereis it's defined retaliatory motive so broadly that it's taken away that First Amendment corrective. And that is

itself a distortion of First Amendment principles whichallowed the unions to bring these suits in the first place, it seems to me.

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MR. WALLACE: Well, there -- there is a verylimited remedy available here compared to the prospectthat treble damages might be awarded on the basis of rather unpredictable findings about subjective motivationin bringing the lawsuit. And it -- it -- it's a remedythat's been applied against a background of what this Court in Bill Johnson's referred to as a -- a powerful tool. Powerful was the word the Court used.

QUESTION: Mr. Wallace, is retaliatory motive --is that before us in this case? I mean, it may be thatthis Court, by saying that the board -- that there was, even in this case, insufficient evidence of retaliatorymotive, but I didn't think that was the question presented here.

MR. WALLACE: I agree with you on that point,Justice Ginsburg.

QUESTION: Because on that, I was going to askyou, well, what is it that shows that this was inretaliation for violation of section 7 rights instead of being in -- in response to the union's desire simply to harass the employer? I think that there are very seriousquestions about that, but my view was of this case that --

that wasn't before us.

MR. WALLACE: I -- I agree with you completely. In fact --

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QUESTION: I take it -- I take it the backgroundof this case is that there was a finding of retaliatory motive and we have to make our decision based upon the way the board interprets retaliatory motive in cases such as this.

MR. WALLACE: Well, it's certainly part of thebackground of the case, but the Court did limit the grant of certiorari to whether these two decisions are compatible given the differences between the two acts.

QUESTION: And we have to defer both to theboard's determination of what constitutes a retaliatorymotive and, even more so, to the board's factual determination that retaliatory motive existed. All ittakes is one witness who says it existed, and that would constitute substantial evidence. And if the board goeswith that witness, the courts have to effectively penalizethe company for seeking resort in the courts.

MR. WALLACE: Well, there is seldom directevidence of that kind, although occasionally there isdirect evidence of animus in the bringing of the suit. But the board has relied on a number of factors, which we've set out on page 47 of our brief, in various -- in

various cases in seeing retaliatory motive. In this caseone of the more persuasive ones was that the lawsuit was brought against parties that the plaintiff knew or should

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have known did not participate in the allegedly unlawful conduct. They included as defendants unions that hadnot --

QUESTION: That's an issue that was raised byquestion 3 of the cert petition, and we didn't grant it.

MR. WALLACE: That's correct. That's correct. The -- the petition --

QUESTION: But -- but --MR. WALLACE: -- was about the compatibility of

the Court's decision in Professional Real Estate with whatwe had taken to be the Court's clear prescription of the limits on the remedy of the 8(a)(1) and unfair labor practice in the Bill Johnson's case.

QUESTION: Mr. Wallace, we are concerned withthe Bill Johnson's case, and a question has been raised about where does the authority to come -- come from for this fee-shifting. It does appear in the Court's opinionin Bill Johnson's. If a violation is found, the board mayorder the employer to reimburse the employees, whom he has wrongfully sued, for their attorney's fees. Where did theCourt come up with that fee-shifting? Was that somethingthat the board had been doing? Did the Government propose

it? But it's right there in the Court's of opinion thatthe proper remedy is fee-shifting.

MR. WALLACE: Precisely so. But the board had46

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been doing it regardless of the merits of the underlying lawsuit. The board had become so concerned with the useof the courts for retaliatory litigation that whether the lawsuit was meritorious or not, if it found that it was brought for the purpose of defeating section 7 rights, it was awarding fees. And the Court said, no, wait a minute. You can't do that and you can't enjoin lawsuits that are not baseless. The Court was really correcting the boardand reining in that remedy in a way that the board hascomplied with.

QUESTION: Thank you, Mr. Wallace.Mr. Baskin, you have 4 minutes remaining.

REBUTTAL ARGUMENT OF MAURICE BASKINON BEHALF OF THE PETITIONER

MR. BASKIN: Thank you, Your Honor. I wouldjust briefly like to address the question of retaliatory motive, but only as I understood the Justices' questions to be does it suffice alone so that they -- the board canrightly ignore the question of the objective basis. And-- and the reason it does not suffice, among others, is perhaps looking at the 26 decisions Justice Scalia found, there's only one among them where there was no finding of

retaliatory motive and there only because it was found that the action didn't relate in any way to the union activity.

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QUESTION: There was only one -- one where what?MR. BASKIN: Where there was no finding, where

the board found no retaliatory motive. It found againstthe employers 25 out of 26 times. Once it found that theemployer had lost the lawsuit, automatically according tothe board, no merit. Even though they had all the bestcircumstances leading up to the loss, they lost. Nomerit.

Then the board proceeds to the retaliatory motive step supposedly going to protect employers, and allthey say is does it relate to union activity. Well, if itrelates, except for one case where it didn't, boom, you lose. The employers lose.

And what the result of that is, is that noemployer can go to court if any sort of protected activity is even arguably involved because even if you convene a panel of experts, as BE&K did in this case, and go as faras you can to make sure you are not trampling on anyemployee rights, if you go to court, you will be found to have violated the law unless you can say with 100 percent certainty that you're going to win. And no one can saythat.

QUESTION: I didn't know -- as long as you're

finished, I thought the 26 cases were 26 cases in which they awarded attorney's fees.

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MR. BASKIN: No. 26 cases with attorney's feesplus, attorney's fees --

QUESTION: All right. Now, I thought theyweren't supposed to award attorney's fees or anythingunless there was a retaliatory motive.

MR. BASKIN: Yes. The board found retaliatorymotive.

QUESTION: All right. No, but I mean, of coursethey did. I mean, how many cases where there where peoplealleged retaliatory motive and they found the opposite?

MR. BASKIN: In the 26 cases --QUESTION: No. Those are the ones where they

won. How many did they lose? I mean, I don't understandthis 26 case business. I thought the 26 cases were theones that they awarded it in, and I thought they were only supposed to award it where it's retaliatory. So, it'shardly surprising it's retaliatory.

MR. BASKIN: No. As I understood JusticeScalia, and frankly our own research, is these are 26 cases that reached the board where the board could have gone either way, and every time, except for the one, they found no merit and retaliatory motive. And they did so

almost automatically because of their misreading of aprinciple. We say a misreading. But either way, it's abad principle.

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QUESTION: Well, when you say the board couldhave gone either way, you don't mean that you know the evidence and that, in fact, on the evidence, the board could have gone either way. You simply mean that it's acase in which if the evidence showed there was retaliation, they could award the fees, and if the evidence did not show retaliation, they couldn't award thefees. Right?

MR. BASKIN: The 26 cases are --QUESTION: So, all we know is that in those

cases, they found retaliatory motive. We don't know thatthey're wrong.

MR. BASKIN: Yes, that's -- that's what we know. They found retaliatory motive. And the limited point thatI'm making here at the end is that this retaliatory motive idea is no more -- not enough protection under the NLRA just as it is not enough protection -- and you've already found it to be not enough protection -- under the antitrust laws. And that's why the Professional RealEstate standard is the correct standard and it's the only one that protects employers' rights under the FirstAmendment.

Thank you. CHIEF JUSTICE REHNQUIST: Thank you, Mr. Baskin.The case is submitted.

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(Whereupon, at 12:08 p.m., the case in theabove-entitled matter was submitted.)

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